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| Mortgage approvals down 20% after Brexit but shoppers spend more on credit cards | Mortgage approvals down 20% after Brexit but shoppers spend more on credit cards |
| (about 2 hours later) | |
| The number of mortgages approved by British banks in July fell to its lowest in 18 months, but robust credit growth added to signs that the Brexit vote has not yet impacted consumers, industry data showed on Wednesday. | |
| British banks approved 37,662 mortgages for house purchases last month, down from 39,763 in June and 19 per cent lower than in July 2015, the British Bankers' Association said. | British banks approved 37,662 mortgages for house purchases last month, down from 39,763 in June and 19 per cent lower than in July 2015, the British Bankers' Association said. |
| The numbers suggest some buyers are waiting to see how Brexit will affect house prices. However, the total amount borrowed was up 6 per cent as the average loan value increased, according to the figures. | |
| Net credit card lending rose in July by £291m after a £283m increase in June as borrowers splurged on 168 million plastic-funded purchases. | |
| The amount spent on cards grew 6 per cent, compared to just 2.4 per cent uptick in real earnings over the year. | The amount spent on cards grew 6 per cent, compared to just 2.4 per cent uptick in real earnings over the year. |
| “The data does not currently suggest borrowing patterns have been significantly affected by the Brexit vote, but it is still early days,” BBA chief economist Rebecca Harding said. | “The data does not currently suggest borrowing patterns have been significantly affected by the Brexit vote, but it is still early days,” BBA chief economist Rebecca Harding said. |
| “Many borrowing decisions will also have been taken before the referendum. We are also clearly still a nation of shoppers and the Brexit vote has done nothing to change the fact that we use credit cards for short-term purchases.” | “Many borrowing decisions will also have been taken before the referendum. We are also clearly still a nation of shoppers and the Brexit vote has done nothing to change the fact that we use credit cards for short-term purchases.” |
| Many economists have predicted slower economic growth as a result of the uncertainty over the UK’s access to the EU, its largest trading partner. | Many economists have predicted slower economic growth as a result of the uncertainty over the UK’s access to the EU, its largest trading partner. |
| But the pessimism has not yet been reflected in people’s spending habits, with strong retail sales numbers earlier this month showing little impact so far from the shock vote to leave the European Union. | But the pessimism has not yet been reflected in people’s spending habits, with strong retail sales numbers earlier this month showing little impact so far from the shock vote to leave the European Union. |
| However, lack of confidence in the future of the economy has been evident as investors pulled £5.7bn from UK stock market funds in July. In the same month £18bn of property market funds were frozen to withdrawals as investors rushed to take out their cash amid fears of a crash in UK real estate values. | |
| Lack of confidence led the Bank of England to cut interest rates to a record low of 0.25 per cent and print £170bn of new money in August. |